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Wage Disparities across Immigrant Generations: Education, Segregation, or Unequal Pay?
JooHee Han1, Are Skeie Hermansen1
1JooHee Han is Researcher in the Department of Sociology and Human Geography at the University of Oslo. Are Skeie Hermansen is Professor of Sociology in the Department of Sociology and Human Geography at the University of Oslo and Researcher in the Swedish Institute for Social Research at Stockholm University.
Industrial & Labor Relations Review
|August 12, 2024
Summary
Wage gaps for immigrants and their children in Norway are mainly due to job segregation, not unequal pay for the same work. These wage disadvantages decrease significantly across immigrant generations.
Area of Science:
- Labor Economics
- Sociology of Immigration
- Human Capital Theory
Background:
- Immigrants and their native-born children often experience wage penalties compared to native-born populations.
- Understanding the drivers of these wage disparities, such as education, job segregation, or pay inequity, is crucial for effective policy.
- Existing research has not fully elucidated the specific mechanisms contributing to these wage gaps across different immigrant generations and labor market segments.
Purpose of the Study:
- To investigate whether immigrant-native wage disparities in Norway are attributable to differences in educational qualifications, labor market segregation, or unequal pay for equivalent work.
- To examine how these wage disparities vary by immigrant generation (first and second generation).
- To analyze whether these disparities differ across various segments of the labor market.
Main Methods:
- Utilizing linked employer-employee data from Norway, a rich dataset allowing for the analysis of individual worker characteristics and firm-level information.
- Employing econometric techniques to disentangle the contributions of educational attainment, occupational and establishment segregation, and within-job pay differences to wage gaps.
- Comparing wage disparities across different immigrant generations and various labor market sectors.
Main Results:
- Immigrant-native wage disparities are primarily driven by sorting into lower-paying occupations and establishments, rather than unequal pay for the same job.
- Wage disadvantages for immigrant-background workers are substantially reduced across successive immigrant generations.
- When performing identical tasks for the same employer, immigrant-background workers, particularly the second generation, receive wages comparable to natives.
- Job sorting appears more meritocratic for university graduates, professionals, and in the public sector, while within-job pay disparities remain consistent across market segments.
Conclusions:
- The primary driver of wage inequality for immigrants and their children in Norway is occupational and establishment segregation, not discrimination in pay for similar work.
- Integration policies should focus on facilitating access to higher-paying occupations and reducing segregation to mitigate wage gaps.
- The findings suggest a degree of meritocracy in pay for similar work, especially for highly educated individuals and in certain sectors, but highlight the persistent challenge of job market entry and progression for immigrant groups.
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